Airbus A380 Production End.jpg

Airbus Calls Time on A380 Program

The OEM announced plans on Feb.14 to end the superjumbo's production program from 2021 and attentions may now turn to the aircraft's secondary market.

Roughly 10 years ago this column was roundly criticized for describing the Airbus A380 program as a failure.

Orders would snowball once airlines realized what a great aircraft it was, some said; the A380 would herald a new era of long-haul, low-cost travel, others argued.

In truth, the aircraft has faced the same problems since 2009: not enough orders; dubious credits in its backlog; over-reliance on a single customer – Emirates; and the obvious attraction of point-to-point travel over multi-stage hub-and-spoke flights.

Airbus may have talked up how much passengers liked the aircraft, but such preferences rarely sway fleet planners – operating costs, capital outlay and ease of integration into a fleet are far more important.

The OEM probably gave up hope of attracting significant new customers several years ago, persisting with the program because of Emirates’ demand, but with the cancellation of 36 orders from its flagship customer, the superjumbo was doomed.

As a result, on February 14 Airbus announced it would stop A380 production from 2021.

Airlines and lessors also care about residual values, which has been a big question mark hanging over the A380 for many years.

Thus far, the secondary market has been limited to one A380 leased by Portuguese ACMI operator Hi Fly, and the creation of a new subsidiary by Malaysia Airlines dedicated to services for Muslim pilgrims.

A380 lessor Amedeo argued this week that the program cancellation would benefit the aircraft’s value, but if no-one wants to operate second-hand A380s, what value do they have beyond scrap? Even that value seems limited given that the A380’s engines – the most valuable part of an aircraft – are not used by other platforms.

Presumably, there is some price that airlines would take them at, but this might be incredibly low given the infrastructure challenges of incorporating the double-decker into a fleet. Of course, cheap used A380s might be more attractive to existing operators, but many of these are scaling back their A380 commitments.

It will be interesting to see the appraisers’ take on this matter in the coming weeks.

TAGS: Airframe
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